Currency Trading With: Ichimoku Kinkou-Hyo
Currency Trading With: Ichimoku Kinkou-Hyo
Currency Trading
with Ichimoku
Kinkou-Hyo
Cornelius Luca, author of several trading books, details the Ichimoku
technical study and applies it to numerous currency examples.
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T
he Ichimoku Kinkou-Hyo is a techni-
cal study that was developed by a To-
kyo newspaper writer, Goichi Hosoda,
before World War II as a self-standing forecast-
ing method for all financial markets. The name
is a bit of a mouth-full, so many traders only
call it Ichimoku, but in loose translation the
full name means “One-look at the equilibrium
prices.” The name originated with Hosoda’s
pen name “Ichimoku Sanjin,” which means a
glance of a mountain man.
Ichimoku Kinkou-Hyo
The Ichimoku system consists of five lines: Ki-
jun, Tenkan, Chiku, Senkou Span A and Span
B. (See an application of this method as ap-
plied on the daily euro/dollar chart in Figure
1)
Figure 5 - Application of the Ichimoku’s trend line (Kijun) – the Kijun line acted as a Finally, in the third phase of the down-
resistance line during the short-lived recovery within the euro/dollar’s downtrend. trend, the Kijun line acted more its role.
Figure 8 shows it declining in line with
the euro/dollar in the beginning and the
end of the move and providing a strong
barrier during the sideways trading area
in the middle of the chart.
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Tenkan (Signal Line)
The Tenkan line is a signal line that works
in conjunction with the trend line (kijun).
A crossover above the trend line gives a
buy signal and a cross over below the sell-
ing line provides a sell signal. Figure 10
shows a combination of the Tenkan and
Kijun lines.
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TECHNICAL ANALYSIS
Senkou Spans A and B (Cloud)
The two Senkou, or leading lines, create a
Cloud-like formation, Kumo in Japanese,
and this is an area of support or resistance.
The market must break above the Cloud
to give a buy signal or below the Cloud
to give a sell signal. The Senkou lines are
used in a similar manner as the standard
support and resistance levels.
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then the buy or sell signal is normal in
significance.
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